The average monthly spend per person on apparel for the first quarter of 2024 has dropped by 3 per cent to around $101 according to the latest CommBank iQ Cost of Living Insights Report.
Spending on household goods and apparel was again lower than last year, the report confirmed. For these categories, the rate of spending decline lost some momentum compared to deeper cutbacks over 2023.
Despite the spending cutbacks in apparel and household goods, discretionary purchases rose 1.4 per cent year-on-year to account for a $1,386 spend on average per month.
“While we saw an uptick in expenditure on experiences like travel and entertainment, growth in these categories has slowed relative to previous quarters,” the report noted.
In essentials, consumers clocked up an average of $1,472 per month, driven by price rises in many of these categories and less room to reduce spending.
It comes as Millennials slashed their spending on a per capita basis, with those aged 25-29 dropping their spending by 3.5 per cent compared to last year, while those aged 30-34 reduced their spend by 0.6 per cent.
Those aged 25-29 were also the only age group to cut back on both essential and discretionary expenses. When considering inflation, their consumption has shrunk more than 7 per cent compared to May 2023.
On the flipside, those over the age of 65 continue to spend above the rate of inflation. Those over 75 years of age have lifted their spending by 6.8 per cent.
“Compared to the national experience, where most people have had to increase spending on essentials, we are seeing the opposite trend amongst those in their twenties, with essential spending falling at a similar rate as discretionary,” CommBank iQ head of innovation and analytics Wade Tubman said.
“These cuts include a 10 per cent drop in health insurance, a 7 per cent drop in utilities and a 4 per cent decrease in spending at the supermarket. This highlights the difficult choices people in this age bracket are making, with some having to make larger lifestyle changes like foregoing their health insurance altogether. The decrease in utilities spending could also suggest young Aussies are moving back in with parents or into shared accommodation to split costs.”
Nationally, spending increased by 2.5 per cent, with essentials increasing by 3.6 per cent, which was driven by key categories such as insurance (up 8 per cent), utilities (up 6 per cent), pharmacies (up 6 per cent) and supermarkets (up 5 per cent).
“Many Australians are having to allocate more of their wallet to essential living expenses, rather than other areas where they may prefer to direct their spending,” Tubman added. “The cost-of-living initiatives announced in the Federal Budget, for example the energy bill rebate, reflect the increased spending by Australians on essential items like energy.”
The wide gap in spending patterns across age groups also continues to persist, Tubman said, with Australians in the 60 and older age bracket spending above inflation, especially on activities like travel, which is up 11 per cent, general retail up 9 per cent and eating out, up 7 per cent.
Across the country, regional Australia continues to hold up better than metro areas with a 3 per cent annual uplift in spending, compared to 2.3 per cent. Consumers in regional areas more than doubled their discretionary spending compared to those living in metro areas - 2.4 per cent versus 1 per cent.
According to the report, spending was most resilient in Queensland, where spend per capita on travel was higher than the nationwide average. On the same measure, falls in household goods and apparel were not as pronounced.
New South Wales reported stronger growth, particularly in regional areas, while Victoria scored weaker gains. The report noted that Victorians tended to reduce their spending more significantly than others when it came to homewares and apparel and didn’t increase spend as much on travel, leisure and eating out.
“While spending in regional areas continues to outpace that of metro areas, this gap has narrowed when compared to previous quarters,” Tubman said. “This raises the question whether people in metro locations have downsized their wallets to adjust to higher prices, and what spending growth remains is now ‘the new normal’.”
CommBank iQ is a joint venture between Commonwealth Bank of Australia and data science and artificial intelligence company Quantium, which uses de-identified payments data from approximately 7 million CBA customers to track spending trends.